Definition
A write-off is the accounting action of removing an uncollectible or forgiven invoice balance from accounts receivable and recording it as an expense. Write-offs are used for bad debts, small residual balances not worth chasing, and goodwill adjustments after a dispute.
Write-off in practice
A write-off is different from a credit note. A credit note reduces what the client owes because of an agreed reason; a write-off removes a balance the client still technically owes but you have decided not to pursue.
Frequently Asked Questions
Should I write off small unpaid balances?
Yes, when the cost of chasing exceeds the amount. Set a threshold, for example $10, and write off anything below it after one reminder.